*1 special V. tive of inconvenience and in- justice.” by ap final raised pointed It should out that here also be pellants here which will be dealt with testify spouse neither was called on to admissibility into evidence concerns the against the other. by appellants made statements accountant, extra-judicial and of their VI. by appellants ap made since statements appellants’ We have examined all pellants spouses allegedly were could n preju- contentions with care find no testify against open each other in fairly Appellants dicial error. were States, court. Bouschor v. United 1963, guilty tried and found substantial evi- clearly indicates the dence. protect reluctance courts to things testimony by This client from case is in the tax con all affirmed. Appellants sultant. admit as much privilege
their brief. The husband-wife apply, herein,
does not as is the case
where the communications were made to
third thus not confiden tial and statements related to
joint party affairs. Here each was the agent making joint the other returns, applying income tax for loans pertinent and in all matters involved in America, UNITED STATES pointed As case. out in McCormick Appellant, Evidence, Ed., 84, pages 3d. 172- § v. 173: SOUTHWEST POTASH CORPORATION “ * * * Surety Company pri- Communications in American Appellees. York, New vate between husband and are wife assumed to confidential unless the No. 7945. subject message or cir- Appeals United States Court contrary. cumstances show the It Tenth Circuit. expressly if it was is confidential 15, 1965. Oct. subject so, made or if the is such communicating spouse the probably would desire that mat- kept secret, ter be either because embarrassing disclosure would be or for some other reasons.
The fact that the communication re-
lates to business transactions tends
to show that it was not intended as Examples confidential. are state- agreements
ments about business spouses,
between or about busi-
ness matters transacted
spouse agent other, or property, conveyances.
about
Usually such statements relate
facts intended later to be- publicly
come known. To cloak them privilege when transactions litigation produe-
come into would be
114
Roger Marquis, Atty., Dept, P. of Jus- Acting (J. Williams, tice Edwards Asst. Atty. Jr., Gen., Quinn, and John F. U. S. Atty., brief), appellant. with him on City Willis, York
William E. New (Iden Johnson, M., Albuquerque, & N. Anthony Sullivan & Cromwell and Chand- ler, City, brief), him on New York with appellees. MURRAH, Judge, SETH, Before Chief Judge, TEMPLAR, Circuit and District Judge. MURRAH, Judge. Chief interpretation This suit involves the of Department of of mining pro- Interior leases deposits potash public duction of on lands ap- New Mexico. The United States summary judgment peals from for the lessee-appellee construing pertinent provisions contrary to the administrative application. construction These pursuant leases were issued to the so- February 7,1927, called Potassium Act of 1057, 282, 44 Stat. 30 U.S.C. § provided accordance with the statute royalty percent gross of 3% “output deposits value of the * * * point of to mar- royalty “paid ket.”.1 Such be monthly in cash or in kind at delivered option of the lessor.” In accordance pertinent regulations,2 it was “ex- pressly agreed that of may Interior establish reasonable mini- computing mum of values for the royalty deposits, of due being given highest consideration majority price part for a or quality products of like from general area, posted price the same matters.” relevant provides in the rates 1. Sec. 2 the Act material basis for the determination royalty part payment less for the of “a amount shall quantity highest mar- than obtainable than centum of best less potas- output price mineral ket of the ore and customary place ucts, compounds usual sium shipment ** sale, of them at the time to market right Secre- and the is reserved to the tary 231.27, price p. “Sale of the Interior to determine § 30 C.F.R. highest price; market if it is deemed than declare such necessary by not less pro- may him so the Interior do determine price lessor.” tection of the and declare market The sale interests operations mining ceptance In the basis of appellee, other lessees in the contract leases the like the ore would area, ore at or near the amount to a crushed the reduction in- compared and hoisted it to the come face of mine being pro- where it surface was treated and refined value of *3 potassium produce potash by lessee; (2) com- duced sold and products. products against discriminatory mercial These that were it would be selling producing f. o. or near mine site at sold b. at other lessees then posted prices ranging highpriced products. Super- from about other The $35 per per potassium sulphate, pointed knowledge, ton visor $21 out that to his potash, per ton for muriate of and $3.50 there had similar never been a situation crushed, finely unrefined, area; ton for but in the Carlsbad and that the sale ore, commonly called salts. The manure could not be construed as a sale of manure prices actually varied in with the accordance salts since National did grade degree products of fineness refined from the ore. uct, accepted was appeal On Interior gross particular prod- on of the Regional Supervisor, con- affirmed cluding produced uct the lessee. and sold Department that was “enti- royalty position,” tled maintain its Company, The National Potash another is, require that that its return area, lessee in the same needed South- high grade not be diminished as a result of such dis- west’s upgrade ore to blend with and posal. The was moreover grade its low in the refin- ore acquiesce ing “non- view that to in this processes. Southwest contracted customary” disposition of the ore would with National to sell it million about five grade effect modification of the high amount “in to a ore, tons of crude to be deliv- contrary of the terms to the interest five-year period, ered over a for $2.75 Regional United States.” Thereafter produc- f. ton b. The ore o. was to be Supervisor informed Southwest that ed and sold under the contract connec- suant to the decision appellee’s regular mining tion with royalty due the United States operations and commitments. Unlike ma- tonnage crude sold to National would salts, ore exactly nure it was delivered as it computed mean the basis of the potash came from the mine as crude ore. average of the value of admittedly unique It is transaction in products actually of like ore sold industry area, ques- in this no but Southwest the current month. tions the bona fides the transaction. agreeing After with National that if Prior to the consummation of con- Secretary’s position finally the tained, were sus- tract, Regional Southwest informed the equally would bear Mining Supervisor in New Mexico royalty burden, appellee pro- the added proposed contract, stating in detail the perform ceeded to its contract with Na- underlying sale, economicreasons for the paid, tional. protest, At first under suggesting though govern- that monthly royalties computed on the basis ment’s would be less because of the value of the refined ultimately the sales it would be ad- Later, royalties ore. it accounted for the vantageous and in the interest conser- only on price. the basis of the contract Regional Supervisor vation. The made objection government the consummation filed this suit to re- contract, but insisted that royalties cover the difference between the computed from the contracted ore “must be com- on the basis of the refined puted paid by Southwest of and the contract if summary basis as the ore were refined and lessee moved judgment obtained therefrom marketed answers to in- Super- terrogatories gov- Southwest”. The reasons and affidavits. The (1) position opposed summary judg- visor’s the ac- ernment first leaving amending complaint discretion of the ment, that to the Sec- but after regulations. applicable retary royalties to the date to judgment recover and for cancellation proposition We start terms, itself of its lease for breach namely dispute, is no there about which summary judgment. Inas- moved Secretary’s construction much decision of the as the light applica in the lease contract on construc- and of the trial court turned regulations implementing ble statute contract, case tion Indeed, great respect. if is entitled summary judgment. ripe for Secretary’s interpretation is an “ad it, one”, to honor initially we bound missible summary judgment The trial court's though en would have even premised squarely the lessee is on full of it. See view tertained different recognition undoubted *4 Tallman, 1, 85 S.Ct. 380 U.S. Udall v. power authority administratively to If, 616, cited. and cases 792, L.Ed.2d 13 construe the lease contract in consonance statutory therefore, the of words the underlying regulations statutes and contract, “gross of out the value lease put and of his wide discretion under lease the * * * compounds potassium of to establish reasonable minimum values shipment rea point can of to market” at computing royalty the of only sonably to mean construed any products” giving of the “lease after an product in sale suitable treated highest price due consideration to the accept market, must we established production quality of like though the the lease even construction of products from the same area. The court Secretary may the defined otherwise have view, however, was of the in that the ex- language at some or similar discretion, of this ercise broad the Secre- context. in some other time tary was confined to the establishment products of minimum values on ac- posture lease In this we would have oc- tually produced sold, he Secretary and that was casion to consider whether the “plainly wrong” interpretation in of his properly unquestioned has power exercised his underlying regulations the contract and to establish “reasonable minimum requiring pay royalty royalty the lessee to purposes computing the of values of the reasonable of value refined deposits”, or in words lease the actually produce high- it did not regulations of to the determine “the arriving sell. In this decision at the trial of est and best obtainable impressed by portion court was of that ore and at usual mineral agreement provides the lease which customary place of of them * * royalty kind, option But, cash or in at the sale at the time of lessor, of the if and reasoned that implementing of course the consider Secretary royalty had its language regulations elected take insofar lease kind, required could not meaning he have gives it key substance process it for statutory “output potassium lessee refine of words * * * royalty. poses computing of court ship- point compounds of ruling prior of lease, was also influenced nec- ment to market”. The Geological Survey affirmed statute, speaks essarily upon of reads Secretary involving royalty pro- similar deposits output of the leased “the potassium lease market”, visions of another shipment point but of of leasehold language which the “value import the same. used is of the royalty is purposes of determination Secretary specifically did While the value, regardless physical or chemi- of critical words construe these form, custody point cal at statutory progenitor, he has em- or their les- is surrendered position he phatically that taken undertake to The court did not see.” royalty on the basis entitled to the ore minimum value determine the value price; regardless National, sale of the contract actually produced and sold to
117 acceptance the minimum mine values that Secretary oil. The would to a modifica- determined that other basis amount posted particular price of oil in of the lease. From this crude tion the terms say “unreasonably low, field was fair to that and not in it seems according- has, impliedly least, accord construed the with true He at values.” ly “output of the leased de- minimum critical words established values posits to mar- oil. court sustained The trial - Appeals ket” to mean the the Court af- deposits Appeals as custom- firmed. the lease The Court of observed arily authorizing provisions in an established sold in this area the contract fix market. the minimum values drastic, oil but upon three cases relies sustained the determination involving value determinations upon based evidence of the true market Departmen- royalty provisions in similar value of the oil. only way, pointing the tal leases as review, scope our but to the narrow case, Udall, The other California Co. v. interpretation permissible U.S.App.D.C. 262, 111 also as well. critical words involved the of a De- partmental gas oil and in which is United of these cases The first .lease Secretary, exercising Co., discretion F.2d commit- *5 States v. Ohio Oil him, by production” ted to Secretary was, defined “value of In that case the in the produc- lease to lease, mean “to “marketable the terms of the authorized tion”, being necessary producer for the reasonable minimum value determine the gas highest to condition it for upon market. oil” based “the lessor-producer sought The to per deduct the price barrel offered conditioning cost open from the sale in a fair and time of * * * Judge Prettyman, dealing key pro- with the quality market for like oil “marketability” word per- “market” or field duced and sold from the ceived “a clear difference between ‘mar- The lessee leased lands are situated.” keting’ merely selling. For for- fide contract sold the oil under a bona market, mer there must a an estab- pipeline company bar- for with a 77?! product.” lished demand for an identified The determined the min- rel. emphasized power He both the and the posted imum value the oil to be duty to administer showed that The record $1.02. statute, and so to “ad- quality pro- determine as an grade and oil of inferior meaning matter” ministrative transported in same duced field terms in that The statute. District under similar condi- market Columbia nothing Court concluded that the Secre- tions sold for was There $1.02. tary had except not abused his discretion in justify price differential defining purposes for administrative contract entered into was statutory “production”. inducing purchaser word to con- pipeline order to field in struct a distinguishable, While these cases are a We the trial afford market. reversed they range do serve to indicate the wide power au- court and sustained power interpret administrative thority of the to determine the provisions statute discretion minimum values as within the Secretary’s judg- which, in manner him terms committed to ment, public in- seems to best serve the lease. By analogy, terest. it does not seem States, In Continental Co. v. United Oil phrase more drastic to construe the “out- the Ninth Circuit was con- put deposits” “re- of the leased to mean cerned of a suitable an established Departmental gas lease, fined oil pro- also market” than to construe “value authorized the to deter- produc- accountability attaches, duction” to mean “marketable tion” in the context of the two cases. and is not avoided the diversion of the product prior processing severed This transaction is unlike a sale of marketing as was in the done case at bar. manure salts which commands its own es- compete tablished market and does use of The the historical market part market as constituent re- salts” is “manure consistent with this fined as does this crude ore. view because there exists an established market which is used material range of Given the discretion prod- value when severed Secretary, committed to the un disposed uct is there of. say able to con administrative any event, In the lease here concerned struction accorded the lease is not an 2(d) provided in tary one, Section that the Secre- and it admissible therefore must be empowered upheld. to establish reason- royalty compu- able minimum values any There does not seem to be contro- by regulation empowered tation. He was versy concerning Secretary’s here to customary place determine the best market determining formula for product. of the ore as a In although did, ucts lease. This he open event the matter remand for by any means in the clearest manner. Secretary’s determination in first instance. ore, the lease was the customary place market for these do not think We the lessee’s fail products which started on the refined pay royalties ure in accordance route inwas the refined upon demand based market. The value of the diverted ore his construction of the contract should question was determined its mineral work a forfeiture of the lease. dis customary content valued in this agreement judica served to invoke the using average unit values and results. tory process open to both in the *6 adopted The formula was a reasonable expeditious way provided by most estab appellants’ accountability based on procedure. lished rules of Kirk, See Rush v. on the severed F.2d liability matured into a when The case is reversed and remanded was sold as was done here. proceed accordingly. with directions to This formula is described in the letter Regional Mining Supervisor dated SETH, Judge (concurring Circuit spe- 2, 1959, fairly December and deter- cially). mines the value or market It is foregoing demonstrated in the product. severed opinion applicable statute There is no basis in the record or in provisions, together law for a forfeiture of the practice lease as de- years, over the dictate that the by appellee. manded no more There was computed processed is disagreement than an honest construc- value at to market. applied tion of the lease terms as an Use of such a value is somewhat unusual good entirely disposi- unusual but faith mining lease, in a prob- and leads to the tion of ore. Resort to the courts lem before us. procedures administrative should contemplate The lease and the statute discouraged by demands of this nature. royalty alternative poses and no other market. Thus when I concur in the reversal and remand may severed it be said that an this case.